July 22, 2008 - Packaging Corporation of America said that it has started-up a bio-gas refinery to produce methane gas from wood fiber at its Filer City semi-chemical medium mill.

According to PCA, the bio-refinery takes the by-product liquor of the pulp cooking process and utilizes bacteria as a vehicle to convert the liquor directly to methane gas. The methane is then burned as fuel in an existing power boiler, replacing natural gas and coal. The process employs and is dependent upon proprietary pulping and papermaking technology developed internally by PCA.

Since the pulping liquor is converted directly to methane gas, the process does not require recovery boilers or high energy consuming evaporators, which remove water from the liquor so that it can be burned, PCA said.

The evaporators and the chemical recovery unit at Filer City, which is a fluidized bed version of a recovery boiler, have been shut down, the company added.

PCA said the bio-refinery is currently operating at about 75% of capacity and is expected to achieve full capacity and efficiency within a few months.

"The start-up of the bio-refinery at Filer City represents not only a significant milestone for PCA, but also for the development and use of low cost, green energy," said Paul T. Stecko, chairman and CEO of PCA. "The economics on the project are particularly good considering that the returns are based, in part, on replacing primarily coal, a relatively low cost fuel, with methane in our boilers."

The investment in this project was approximately $20 million and PCA expects annual savings of about $10 million. These savings equate to about a $25 per ton reduction in cost to produce semi-chemical medium at Filer City, PCA said.